Bivio Support has reviewed our distribution; we just didn't discuss this issue.
Since the club has existed since 1997, all the members' tax bases are far in excess of the partial withdrawal we're contemplating, even the new member's. It's just that because she's only been a member since April 2016, I wondered if it was an error for her partial withdrawal to be classified as LTCG.
I wonder if the simple solution is to do her withdrawal in May 2017, at which point she'd have been a member for more than one year, presumably making this whole question moot..
----- Forwarded Message ----- From: ira smilovitz <ira.smilovitz@gmail.com> To: "club_cafe@bivio.co Sent: Monday, February 20, 2017 10:33 AM Subject: Re: [club_cafe] Explaining to members how to access their K-1's
Boyd,
I suspect you're doing something wrong, but I don't know what. The sale of the stock should be a long-term capital gain for the club which will be reported on the appropriate year's 1065. The distributions of cash to the members will be returns of capital (no tax impact) for those members whose tax basis is larger than the amount of cash they receive. For those who receive more cash than their tax basis, the excess cash will be short-term/long-term based on their entry date into the club.
That said, you won't know for sure how much excess cash was distributed to a member until the end of the tax year. Their tax basis will include all income/expense items for the year as well as any member deposits made before the end of the year.
If you send a request to support@bivio.com, someone will review the specific transactions in your club's records.
I'm interested in your reply to Linda. My club is about to do a partial withdrawal for all our members by distributing a large LTCG from the sale of a stock. However, altho' one partner has only been a member since April 2016, the withdrawal report classifies hers as LTCG. I have the nagging suspicion that hers should be STCG, but (a) I don't know what to base such a change on, and (b) I don't see any easy way to do so in bivio.
Perhaps the simple solution is to delay her partial withdrawal to May 2017?
If you are suggesting that the gain/loss from the sale of partnership units must be divided into short-term and long-term components, that's incorrect. The gain is all short-term or long-term based on the length of time since the date the member joined the club. A partnership interest is a unitary interest, it's not treated like the purchase of stock or a mutual fund.
There are several ways to calculate the short and long term portions of gain or loss.You can do it by unit allocations or cost allocations.It is too complex to go into here.
Linda
Pointe Players treasurer
Laurie Frederiksen on
Thank you Scott. We will try and pay more attention to that (and you posters can as well by not replying to an old thread when you have a new question).
The problem is that discussions such as this one naturally evolve and I'm not sure that all email programs will stop grouping messages even if the topic is changed.
Laurie Frederiksen Invest with your friends! www.bivio.com